A customer-referral program can be an
easy, low-cost way to boost sales

Who Sent You?

MAKE YOUR
CUSTOMERS BIG SHOTS

Your customers don’t want tobe salespeople, says Will Fraser,co-founder and CEO of referral-program platform ReferralSaaSquatch—they want to beinfuencers. “Greed [for a reward]works to a point, but what reallymotivates people is gaining socialcapital,” says Fraser. “The valueyou’re really giving me is that I[as the referrer] have the abilityto look like an insider and givea friend or colleague an ofer as aVIP customer.” With that in mind,give rewards to both referrers andthose referred. Ztylus, a Houston-based maker of cell-phone cameracases and lenses, gives an initial

25 percent discount to referred
customers and a 10 percent cash
reward to referrers. The company
gets 10 percent of total sales
from referrals.

SIZE DOESN’T MATTER (MUCH)

Companies have had success withsimple cash payouts, percentagediscounts, and less conventionalrewards, but one surprising factholds true: Small rewards performas well as large ones. Luggagemaker Trunkster used to oferreferrers $30 of, but it saw nodecrease in referrals when itlowered that to $20. The mostimportant thing is to keep theofer simple. “You want to makeyour reward easy to understand forthe consumers so it entices them,”says Trunkster co-founder GastonBlanchet. To really catch thecustomer’s eye, go beyond justdiscounts. Fraser says you shouldofer free product wheneverpossible. “If you’re a stock tradingapp,” he says, “what’s going towork there is credit to trade with.”

LOOK OUT FOR SCAMMERS

Unfortunately, many people are
out to scam referral programs.

To collect the reward, some buy
merchandise and then return it,
refer imaginary people, or even
forge coupons. To deter them, give
rewards only when the referred
customer buys something, not just
for inquiries. Put limits on every
aspect of the referral. At frst,
Condren didn’t limit how much
credit her customers could
accumulate, and now a few have
more than $10,000 worth. At
Pavlok, which markets an electronic bracelet that helps break
bad habits, CEO Maneesh Sethi is
revising the company’s six-month
return policy to prevent buyers
from collecting rewards and then
returning the products. “We screen
for people with massive amounts
of referrals,” he says.

FLEXICURIT Y/ • noun.Danish employment policies thatgive companies more fexibilityto hire and fre than is usual inE.U. countries. For Americans,“fexicurity” is having a backupStarbucks when your usualone kicks you out for loitering.Source: Business InsiderErin Condren knew her artistic day planners might notleap out at online shoppers, so she ofered her bestcustomers a deal: If they sent potential business herway through links on their own websites, she’d givethose loyal customers a credit toward future purchaseseach time a referred customer created an account.The approach worked. Today, 12 years after launch,Condren’s eponymous company, based in Hawthorne,California, has a customer-referral program, withrewards for both referred and referring customers, thatgenerated 24 percent of its $40 million in 2015 sales.Referrals may seem old-school, but Nielsen’s 2015Global Trust in Advertising study found that 83 percentof consumers take action—investigate a brand orbuy something—on recommendations from peoplethey know. Use these tips to mine gold from yourcustomers’ real-life social networks. —ETELKA LEHOCZKY18 - INC. - FEBRUARY 2017

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